UK institutions were the most prominent investors in the Birmingham office market, accounting for more than 58% of the value of transactions in 2015.
According to Bilfinger GVA’s latest Who Owns Central Birmingham report, while overall ownership from UK-based organisations fell by 1% over the past 12 months to 70%, ownership from local Birmingham-based occupiers has risen significantly, up from 1% in 2014 to 9%.
The study analyses commercial property ownership across 15m sq ft of office and retail property in Birmingham’s central business district.
The city saw major levels of activity in 2015, with nearly £1bn (£992m) transacted across both the office and retail sectors, up from £645m in 2014.
As in previous years, overseas investment activity remained strong – with overall foreign ownership increasing from 29% to 31% – however there was considerable movement, with Middle Eastern and mixed UK and overseas investors increasing holdings from 2% to 5% and 8% to 12% respectively. Far Eastern investor interest remained flat at 1% of total stock.
Ownership by European investors increased by 6% to 7%, mostly from German funds, which now hold 935,000 sq ft of space. This includes the £130m acquisition by German fund VGV of Royal Bank of Scotland’s Brindleyplace headquarters in central Birmingham and GLL Real Estate’s circa £37m purchase of 1 Brindleyplace.
The city’s largest single commercial deal was Ashby Capital’s acquisition of Colmore Plaza from US private equity group, Carlyle for £138m on behalf of a Middle Eastern buyer.
Ian Stringer, BGVA’s regional senior director, said: “With ongoing demand, the market will likely face under-supply of good quality space until better quality refurbished schemes such as Bruntwood’s 110,000 sq ft 2 Cornwall Street, and IM Properties’ 160,000 sq ft 55 Colmore Row, bring new stock to the market in late 2016 and early 2017 respectively.”
Grade-A stock in overseas ownership is up from 46% to 49%, while Grade-B properties have fallen from 11% to 5%.
Within the retail sector, transactional activity was underpinned by British Land’s sale of the 490,000 sq ft House of Fraser building in central Birmingham to Legal & General for £71m, with other activity including the sale of Martineau Place to Colony Capital as part of the £311m Gemini portfolio, and Orchard Street Investment’s acquisition of the Exchange Buildings on New Street for £40m.
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